Shrinking Magruder's to close in Silver Spring

Venerable grocery chain faces stiff competition

Kevin James Shay/The Gazette
The Magruder's grocery in the Kemp Mill Shopping Center in Silver Spring is slated to close next week.

Faced with increasing competition from both large supermarket chains and specialty operators, Magruder's — which dates to the 19th century — is closing another store, this time its Silver Spring location next week.

Magruder's had 10 stores in 2005 and will be down to five — in Gaithersburg, Rockville, Chevy Chase, Alexandria, Va., and Vienna, Va. — once the Silver Spring location closes. That is expected by July 20, said Sheri Glisson, a manager at the store in the Kemp Mill Shopping Center.

Corporate executives with Magruder's, whose headquarters is in Rockville, did not return calls seeking comment.

About 50 employees work at the Silver Spring store, and some could go on to the remaining Magruder stores or be picked up by Shalom Kosher, Glisson said. Shalom Kosher, a family-owned market almost four decades old, has outgrown its space on University Boulevard in Wheaton and is moving to the larger Kemp Mill space vacated by Magruder's, owner Larry Dekelbaum said.

“The Kosher world has exploded,” Dekelbaum said in a statement, “and we want to be able to service our customers with as many Kosher products as possible.”

Besides specialty grocers, Magruder's is facing increasing competition from major grocery chains such as Giant Food, Safeway and Wegman's, along with big-box, one-stop retailers that are selling more groceries, such as Wal-Mart and Target. Dollar stores also are selling more grocery items.

Not only can they offer more products at more competitive prices, but stores such as Giant and Safeway offer increased services that include curbside pickup in some areas.

Smaller grocers such as Magruder's can compete by establishing “clear points of differentiation,” said retail analyst Thomas Imlay.

“Most believe that focusing on their primary shoppers, offering products they want to buy at fair prices and treating these customers with lots of tender, loving care will be the key to successful growth,” Imlay said.

To compete, such grocers can offer more personalized service, higher-quality fresh products, expanded wine and cheese selections and takeout gourmet foods, he said.

“New concepts, neighborhood marketing and innovation will be the key to success,” Imlay said. “Some will make it work. Others will fail. ... In the customers' eyes, it's all about how well a retailer can satisfy what they are looking for in their shopping experience, and how well the retailer does at creating the perception of value in their minds.”

Magruder's roots go back to 1875, when John Magruder operated two Washington, D.C., neighborhood stores, one near Chevy Chase Circle and the other in Georgetown. The late Louis H. Fanaroff and CEO Stanford Steppa bought the two Magruder's stores in 1967 and added others.

Shalom Kosher plans to retain many features of Magruder's at the Silver Spring site, such as the large produce department, quality bakery and basic pricing, Dekelbaum said. The new store will feature a large deli counter and a gourmet meat department.

Supervalu shares slide

Other grocers are having problems. Shares of Supervalu, which owns Shoppers Food & Pharmacy in Lanham and other grocery chains, fell about 50 percent Thursday to $2.69 after the company reported a 45 percent decline in net earnings for its fiscal 2013 first quarter.

Executives said they would cut $250 million in operating costs during the next two years in an attempt to lower prices and compete better.

“It is essential that we move even more aggressively to lower prices,” CEO Craig Herkert said in a statement. “We will be pursuing deeper and more structural cost savings initiatives. Also, we are adopting more flexible financing facilities, reducing our near-term capital expenditures and suspending our dividend.”